May 10th, 2008
Taxing Windfall Profits of Billion Dollar University Endowments?
Taxing universities with billion dollar endowments might be an idea whose time has come. Many of these universities are subsidized by the state. If they have billions in endowments, why do they need a subsidy?
If the interest earned were, for example, used for scholarships, then the State and Federal government would not have to give taxpayer subsidized grants to students saving millions. Who is profiting from the nonprofits? No one? Billions moving around and no one is profiting? Lawyers? Financial advisors? Teachers and administrators and faculty not getting paid? Not getting platinum plated health benefits? Not building and sucking up investment capital?
Glen Beck analogizes to businesses and he has a point. All the reasons given by Harvard apply to job creating, productive business. More taxes, fewer jobs and fewer products and services.
On the other hand, if businesses are taxed, why not universities? Aren’t they businesses? Taking money in and spending it on what the corporation thinks best. And salaries and fees are paid. The difference is that universities are funded by productive taxpayers who get whatever return the university thinks they should get and there is no choice, no opportunity, not to pay. Whatever the original reasons for special tax treatment, it is apparent that a company with billions in assets does not need the money from the productive taxpayer. And not taxing a Billion Dollar University endowment makes as much sense as not taking a Billion Dollar Business.
Small businesses, even businesses that don’t make a profit, are taxed, why not a billion dollar university?
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